Updated Clarity Act Text Released

On September 10, 2026, Senate Republicans released a revised 630-page version of the Clarity Act ahead of the first procedural vote on the bill, scheduled for September 15. This vote is on a motion to proceed rather than a vote on final passage. 

Senator Cynthia Lummis said the draft incorporates more than 114 provisions requested by Democratic colleagues, negotiated over the August recess. Most notably, Section 20209 provides for a CFTC and Treasury rulemaking regarding when persons who control “non-decentralized finance trading protocols.” That provision also specifies that infrastructure activities are not subject to the CEA and that certain activities related to DeFi trading protocols and user interfaces are not subject to the CEA’s cash and spot regulatory provisions solely based on engaging in those activities. The BRCA and self-custody provisions remain the same as in the last draft.

National Sheriffs Association Withdraws Opposition to the Clarity Act

On September 3, 2026, The National Sheriffs’ Association (NSA) withdrew its opposition to the Clarity Act and moved to a neutral position in a letter to Senate leadership. The NSA explained that, given the complexity of the legislation and the number of details still under consideration, it would “step back and allow the legislative process to proceed.” The change does not amount to an endorsement of the bill, but it removes the NSA’s formal opposition ahead of the cloture vote on the Clarity Act, which is scheduled for September 15.

SEC Investor Advisory Meeting on AI and Regulation National Market System

On September 10, 2026, the SEC’s Investor Advisory Committee met to discuss artificial intelligence in the public markets and potential changes to Regulation National Market System (Reg NMS). The morning panel examined how AI is used to produce, analyze, and disseminate public company disclosures, while the afternoon panel focused on equity market structure and possible updates to Reg NMS.

In his remarks, SEC Chairman Paul Atkins said AI should complement, not replace, human judgment, and cautioned that opaque models, hallucinations, and widespread reliance on similar tools could create risks for investors and markets. Commissioner Hester Peirce urged caution against moving too quickly to regulate AI development, warning that “regulating prematurely” can “deprive Americans of the benefits of technological innovation” and create barriers to entry. 

Chairman Atkins also criticized Reg NMS Rule 611, saying that it had contributed to fragmented liquidity and a more complex market for order execution. He pointed to the SEC’s June 2026 proposal to rescind Rules 611 and 610(e), describing the effort as one aimed at reducing regulatory burdens and allowing competition and market dynamics to drive innovation. The discussion around equity market structure and Reg NMS could be relevant to DeFi as the SEC considers how existing rules, including best execution, displayed pricing, and order routing, may evolve alongside new technologies and emerging markets.

WalletConnect’s New “The State of Policy, Compliance and Regulation” Report

On September 8, 2026, WalletConnect released The State of Compliance, Policy and Regulation Report, an overview of digital asset regulation spanning stablecoins, payments, DeFi, trading, custody, tokenization, AML, sanctions, and the Travel Rule. DEF’s CEO and CLO Amanda Tuminelli and Policy Lead Gavin Zavatone contributed to the report’s foreword, where they emphasized that the future of DeFi development depends on policies that protect software developers, empower users to control their own assets, and maintain the permissionless foundations of open networks.

The report examines how digital asset regulatory frameworks are moving from proposal to implementation across major jurisdictions, while highlighting significant differences in how those regimes approach stablecoins, AML, sanctions, self-custody, and other compliance issues. One recurring regulatory theme is what the report calls “regulated-touchpoint accountability,” under which regulated issuers and service providers generally remain responsible for their own AML, sanctions, Travel Rule, and recording keeping obligations when interacting with self-custodial wallets, rather than shifting those obligations to users who control their own assets. The report also argues that compliance and self-custody can coexist, pointing to tools such as sanctions screening, blockchain analytics, reusable credentials, and cryptographic address verification.

The report identifies a central unresolved question of how regulation should apply when no traditional intermediary exercises custody or control. It concludes that obligations should follow control, intermediation, and identifiable risk rather than attach indiscriminately to neutral software, protocols, or users holding their own assets. This distinction is critical to ensuring that the next generation of financial infrastructure remains open, decentralized, and user-controlled.

Cornell Tech Policy Institute Research on De Minimis For Digital Assets

On September 4, 2026, Cornell University’s Tech Policy Institute released “Fiscal Effects of a De Minimis Exclusion for Personal Digital-Asset Payments,” new research finding that a de minimis tax exemption for small digital asset payments would increase federal revenue. The analysis examines Section 2 of Senator Cynthia Lummis’s tax bill, S. 2207, which would exempt qualifying digital asset transactions of up to $300 from capital gains taxation, subject to a $5,000 annual cap. Some have argued that a de minimis exemption would reduce federal tax revenue, but the Cornell Tech Policy Institute’s analysis reached the opposite conclusion, estimating roughly $859 million in additional revenue over ten years.

The paper argues the government currently collects relatively little tax revenue from small digital asset payments, while the tax and compliance burden discourages consumers from making those transactions in the first place. If qualifying payment volume doubled, the study estimates that only about 10 percent of that additional activity would need to represent genuinely new purchases for the policy to break even. The analysis suggests that reducing compliance burdens could expand lawful use without sacrificing tax revenue, while making it easier for consumers to use digital assets for everyday payments without triggering capital gains taxation on each transaction. A workable de minimus exemption could therefore remove a barrier to routine transactions while supporting broader adoption.

European Parliament Briefing Maps Where Control Lies in Digital Assets

On September 8, 2026, the European Parliament published a briefing examining how control is distributed across the digital asset system. Rather than treating an arrangement as “centralised” or “decentralised,” the briefing suggests assessing control at the instrument, protocol, and access layers. “Box 1” identifies six questions policymakers could use to assess control, including who controls reserves or keys, who can influence transactions, and which intermediaries users rely on for access. For DeFi, one of the most relevant questions is: “At the protocol layer, who can propose, approve or implement changes to the rules?” 

House of Lords Backs UK Digital Asset Strategy Amendment

The UK House of Lords voted 194-138 in favor of Amendment 88 to the Financial Services and Markets Bill, which would require the UK Government to develop a formal Digital Asset Strategy. The Amendment calls on the Treasury to set out its objectives for the sector, consult with industry and stakeholders, and explain how different areas of digital asset policy fit together. It also directs attention to barriers facing firms, including access to banking, payments, and settlement infrastructure. The UK Cryptoasset Business Council welcomed the vote, pointing to Lord Chris Holmes’ broader framing of the amendment as moving the UK from “simply regulating digital assets” towards “building a digital assets economy.” The measure still must go through further legislative steps, including consideration in the House of Commons, but the Lords vote signals support for a more coordinated approach to UK digital asset policy.

Notable and Quotable

“DeFi can unlock enormous benefits for people around the world. But realizing that potential required getting the policy right: 1. protecting software developers and their freedom to build, 2. empowering users to control their own assets and access open financial networks, and 3. preserving the permissionless foundations that make blockchain and DeFi possible.”

— Gavin Zavatone, Policy Lead at the DeFi Education Fund, on WalletConnect’s new Policy, Compliance and Regulation Report

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